JAPAN : JAPAN PASSED YET ANOTHER ECONOMIC STIMULUS

Japan’s parliament has passed a stimulus package worth about Yen 5

trillion (RM 187.61 billion) designed to kick-start the country’s fragile economic
recovery on 26 Nov.2010. Prime Minister Naoto Kan claimed that the stimulus
was designed to create jobs through measures to help small businesses and
boost consumer spending. Till date, the government has already introduced
several stimulus packages to save its faltering economy. Currently, Japan is
struggling with weak growth, a high yen and deflation.

The latest stimulus aims to increase the nation's real gross domestic
product by about 0.6 percent and has set the creation or protection of between
450,000 to 500,000 new jobs as one of its immediate targets to help drive the
economy forward. In addition, the package will seek to strengthen social welfare
by making further provisions for child-rearing, nursing care and other such areas.
Awkwardly, the stimulus measures were initiated without increasing the issuance
of government bonds.

The strong yen has resulted Japan’s exports to be more expensive to

overseas consumers. Figures released on in late Nov.2010 showed export
growth slowing for the eighth month in a row, with exports to Europe falling for
first time for almost a year. Analysts say weaker exports could also contribute to
reduced consumer demand.

Source:
• Japan's extra budget for economic stimulus enacted – Xinhuanet dtd 26/11/2010
Japan passesnew $61bn stimuluspackage BBC NEWS dtd 26/11/2010
Japan’s extra budget for economic stimulus enacted
26/11/2010

TOKYO, Nov. 26 (Xinhua) -- The Japanese cabinet's extra budget for financing a
stimulus package worth about 5 trillion yen (59 billion U.S. dollars) was enacted
on Friday. The budget involves 4.4 trillion yen in actual spending. The move is
aimed at combating the impact of the increasing strength of the Japanese yen
and spurring the deflation-plagued economy.

The bill was voted down at a plenary session of the opposition- controlled upper
house earlier on Friday. But, because it had already been approved last week by
the House of Representatives, which can override a decision made by the upper
house, it successfully cleared the Diet.

The package was aimed to increase the nation's real gross domestic product by
about 0.6 percent and has set the creation or protection of between 450,000 to
500,000 new jobs as one of its immediate targets to help drive the economy
forward.

In addition, the package will seek to strengthen social welfare by making further
provisions for child-rearing, nursing care and other such areas.

Public works projects and a number of measures to bolster small businesses in

Japan are also central to the government's plans.

The latest stimulus measures were initiated without increasing the issuance of
government bonds.

The new stimulus package came after Kan's Cabinet officially approved a 917
billion yen stimulus package in early September, as Tokyo actively tries to
counter the impact of softening export markets and a strong yen that is
threatening a fragile recovery from recession.

Editor: Mu Xuequan
 Japan passes new $61bn stimulus package
Japan's parliament has passed a stimulus package worth about $61bn
(£39bn), designed to kick-start the country's fragile economic
recovery.

The stimulus was designed to create jobs, Prime Minister Nato Kan
said, through measures to help small businesses and boost consumer
spending.

The government has already introduced several stimulus packages.

Earlier, figures showed that Japanese consumer prices fell for the 20th
month in a row in October.

The vote in favour of the latest stimulus measures represents a victory

for the government, which has struggled to get the package through
parliament.

The move is in marked contrast to European governments' policies,

which are focusing on cutting spending to secure growth.

Falling prices
Japan has been struggling with weak growth, a high yen and deflation.

The core consumer price index fell by 0.6% in October compared with
a year earlier, official figures showed.

This was a slight improvement on the 1.1% price falls seen in

September.

Deflation is particularly damaging to economic growth as consumers

delay purchases until prices fall further.

The improvement from September does not reflect any improvement

in consumer demand, analysts said.

"Even though the pace of the fall in prices slowed by 0.5 percentage
points, this was not due to an improved demand-supply balance," said
Asushi Matsumoto at the Mizuho Research Institute.

Instead, he said, it was down to one-off factors, such as a hike in

cigarette prices.
This means that "exit from deflation will be slower than previously
thought," Mr Matsumoto argued.

Weak exports
Japan is also struggling with a strong yen, which makes exports more
expensive to overseas consumers.

Figures released on Thursday showed export growth slowing for the

eighth month in a row, with exports to Europe falling for first time for
almost a year.

Analysts say weaker exports could also contribute to reduced

consumer demand.

"Weak growth in exports could worsen corporate earnings, thus

lowering household incomes to dampen consumer demand," Mr
Matsumoto said.